Indeed. It was a great time to launch a stablecoin, bear market and all.. Now you hear questions like "can/will all stablecoins crash like ust" etc etc.... Ofcourse theres diffrence in how these stablecoins are built, so i think research is important when investing and not just go with the "hype" all the time.
That terra went down to zero i can buy, being volatile and all , but the point of a stablecoin is just to be stable, to be pegged to the dollar , eur or whatever, yeah this was a blow to investors for sure...
Will be intresting to see what the consequences of this will be , more regulation for crypto or just for stablecoins? Who knows...
Yeah unfortunately the most interesting outcome out of this will be if any regulation for global crypto markets comes about.
I feel bad for the people that wanted to commit suicide and lost everything, its terrible.
So obviously there will be a move to regulate these as securities, exactly the reason the SEC was formed to begin with.
But my freedom loving side, I actually believe its better to have no regulation and freedom.
Because that loss of freedom leads to the new world order.
Id rather have crypto plus failures and danger as an alternative to the banking system than a forced global federal reserve that prints whenever the government wants them to print.
But this did a great job at exposing the inherent risks in stablecoins. First of all, UST used its own vulnerable Luna as its backer (with zero intrinsic value), and second they had a rule that allowed the death spiral (sell more Luna at any price to hold the peg). Third they had an inefficient market maker mechanism (40% wide bid-ask spread) to manage the mechanics of the UST-Luna arb. So put that all together and it spells grave danger.
I think an algorithmic stablecoin could actually work if it used an unrelated coin with real reserves (like a certain diversified crypto portfolio) , IF it was not programmed to sell at any price - there has to be a gate limiting each transaction. This Luna, they printed 7000 billions units trying to prop the price up, it absolutely decimated the value of luna. Thats insane because you obviously cant print real value while destroying your own value. They should have thought about that and said, Uhh, 100MM $ didnt work, lets stop here, lol. Let the UST side collapse...
But this will give algorithmic stablecoins a black eye forever, so now they need a gold backed stablecoin with provable reserves or something. Or maybe in 6 months we will see this all over again cause Defi for some reason keeps growing... despite the danger.
